Skip to main content

tv   Street Signs  CNBC  April 8, 2016 4:00am-5:01am EDT

4:00 am
good morning, even. welcome to "street signs." i'm louisa bojesen. >> and i'm nancy hulgrave. these are your headlines. >> reporter: exec board member tells me that the euro is the one adverse effect at present that could prompt the ecb to take rates lower but cautions against a currency war. >> there should not be, i would say, competitive devaluations. italian banks lead gains in europe this morning, shrugging off an ugly session stateside,
4:01 am
which saw the s&p sink into negative territory for the year. this after comments from fed chairs past and present. damage control. the japanese finance minister saying that he is ready to intervene in the fx market in a bid to curve the rapid rise seen in the yen. david cameron comes clean on tax. the u.k. prime minister admits profiting from an offshore fund set up by his father, which was revealed in the panama papers. >> samantha and i had a joint account. we owned 5,000 units, which we sold in january 2010. good morning and welcome to "street signs." happy friday, everyone. >> happy friday. >> a very happy friday. finally we're back in the studio together. >> i know. you've been traveling, i've been out, but it's fantastic to be
4:02 am
together. >> we're seeing the stock market up on a friday. the stoxx europe 600 is higher by around 0.7%. however, on the week, it's down significantly, more than 1%. some of this due to the strength we're seeing back in the energy market. oil prices. of course, the big winner today will be the italian banks. they are leading gains across yoo europe. this has been helped by an announcement that the government could set up a state-backed fund. the scheme will be ready by monday. this is a real reversal we're seeing. quite a dip in the other d direction we saw from the italian banks just yesterday. speaking of italy, i'm just thinking because julia joins us from italy. among others, you'll be talking
4:03 am
to the former prime minister of italy later on. but you've also been speaking to heads within the ecb on policy there. >> reporter: yes, louisa. that's absolutely right. we talked about some of the commentary that's been made in the last couple days. of course, the public account we got on thursday as well. obviously a lot of that discussion focused in on the credit easing they announced at the last meeting and the impact we've seen on the banks on negative rates. the ecb is saying net-net, yes, it's going to have a pressure on profitability in the net interest margin, but if you look at the benefits of lower financing cost and asset price rises, net-net there's been benefits. yes, we have to agree there could be concerns about what the impact would be going forward, but i said to him, look, okay f you're saying that net-net there's been a benefit so far of negative rates, what's going on in the market? because we've seen a 20% drop in the euro stoxx index since the
4:04 am
highs in q-1. are investors overestimating the negative impact of negative rates? listen in. >> the prices of bank stocks in europe to some extent speak for themselves. but they are not the only consequence of negative interest rates. i think there are other consequences, and that is uncertainty on regulation. for example, uncertainty on the amount of dividends that could be paid out. there is regulatory uncertainty concerning capital requirements. all this has been weighing as well on the investability of european banks, if i can call it that way. but if i look at the aggregate figure, i think it has been said
4:05 am
by colleagues that negative interest rates also improve the general economic situation, alleviate the pressure from nonperforming loans, and thereby the provisioning that banks have to put aside, banks also make profits on the stocks of securities, which move in the direction of more profitability for them. so all in all, in an aggregate way, i would not buy the argument that negative interest rates are not usable. what is the case is -- and that is also what the president has said in his press conference. it's the complexity of european banking landscape is much higher. there are banks who face, for example, national regulation, which prevent them to adjust some of their deposit base to the movement of interest rates of the central bank. so those banks, their margin is
4:06 am
admittedly much more squeezed than in other country. >> it doesn't get much more difficult than italy with the fragmentation. i think investors reflect that in the pressure that they've put on italian stocks this year. >> investors look on future prospects for profitability. that's inevitable. if you have uncertainty in this respect, then you will shy away. this is certainly something that plays. but it's not only the negative interest rates. you have to look at the business model of each bank. >> but the ecb is not worried about the italian banking sector? as a supervisor? >> the supervisor at the ecb has taken strong positions in this respect and is being endorsed at
4:07 am
the highest level at the ecb. i think no one can deny that e the -- >> but the point is you're putting your finger on the pulse and saying, need to do more when necessary. >> this has been said for all the countries. the supervisor has given itself an agenda for the year to come. part of that agenda is to look at the level of nonperforming loans in all the countries. as an outcome of this monitoring, some countries will receive recommendations which might not be the same as other countrie countries. >> reporter: there >> there's also been pressure put on as a result of the panama maker leaks. what action are you taking, will you take as a result of this? >> i think the supervisor has to
4:08 am
look into compliance. now you know that banking supervision that has been transferred to the ecb does not include any money laundering, does not include counterterrorist financing, does not include -- but of course a bank which does not comply by those rules is a bank whose future is also in doubt, and where we will have to look at the fit and proper decisions that have been taken in the past. >> because there's a moral element to this. there's a legal, but also a moral element. >> we are not a moral institute. we are an institute that goes by the law. >> reporter: growth, monetary policy in the eurozone not the only factors influencing europe at this moment. the other thing of course is the refugee crisis. coming up, i'm going to be speaking to the former italian prime minister, one who's been very vocal about putting
4:09 am
pressure on other countries saying more needs to be done to address this crisis. for now, back to you. >> great stuff, julia. we're really looking forward to that interview. enjoy that gorgeous backdrop. >> fantastic. >> and it's worth giving you a look here at the euro trade this morning because we have seen just a slight uptick here against the greenback. of course, talking there to julia, saying the ecb is not targeting a specific lower move. meanwhile, central banks have been moving this currency trade all week. we got even more words coming from janet yellen yesterday. this as janet yellen and her three fed chair predecessors all gave their first ever joint speech. during the evening, yellen dismissed suggestions that the december rate hike was a mistake. she was supported by both mr. bernanke and mr. greenspan, who said they did not see a risk of recession on the horizon.
4:10 am
well, yellen also played down risked to the u.s. economy and explained just why she thinks inflation is below target. >> we think it's partly transitory, influences namely declining oil prices and the strong dollar, that are responsible for pulling inflation below the 2% level we think is most desirable. i think we're making progress there as well, and this is an economy on a solid course, not a bubble economy. >> now, the four fed chairs, they also discussed how to unwind the central bank's swollen balance sheet. ben bernanke said he expected it would naturally shrink over time. >> the fed will stop reinvesting securities as they mature, simply step back, and over a period of a number of years, it will just go down. in the end, all we have to show for it is the fact that over the
4:11 am
last five years from those securities, besides the first quarter that they helped our economy recover, the fed has sent profits to the treasury of half a trillion dollars in profit, which has reduced the burden of the taxpayer by $500 billion approximately. so on the whole, it's been a pretty successful policy, and it's one where the rolloff has already been planned and laid out. >> joining us now around the desk is michael bell, global market strategist at jpmorgan asset management. thank you for joining uses this morning. happy friday to you. the central bank debate really continues to run the trade here all week. we've been following it quite closely. we had that big bounce on wall street that was undone yesterday after we heard expectations of a more dovish fed. where do you see the fed going this year? >> i think the fed is going to raise interest rates two more times this year. probably in june and one more by the end of the year. i think yellen was right to say
4:12 am
that the health of the u.s. economy is actually fine. through the beginning of the year, there were concerns about the manufacturing sector in the u.s. in the last couple weeks you have seen day that come through that shows new orders really starting to pick up quite nicely. that weakness you'd seen in january that caused a lot of the selloff is put behind us. >> interesting there, she was noting that perhaps the inflation fears to the downside aren't as bad as many expect. we did hear that from several guests yesterday in the show ahead of the ecb minutes. one of them a former, cb chief economist, saying the inflation problem is not that bad even here in europe. do you agree? >> i think that's right. in the u.s., core inflation is at 2.3%. so there's no deflation concern in the u.s. at all. over in europe, there are more concerns. clearly unemployment is higher, but i think the more likely outlook is that you get core inflation somewhere around 1%, perhaps gradually picking up
4:13 am
from there. the deflation fears at the moment are just being caused by the low oil price. >> but i don't understand because all of the outlooks i've seen for the earnings season that's just around the corner, they're pretty temperamental at the moment. they're not exactly optimistic. a lot of analysts are calling for, i think, a drop of something like 6% for many u.s. the u.s. companies. >> i think you need to strip out the energy companies. if you include energy, clearly the index is going to struggle ginn what's happened to the oil price over the year. the year-on-year numbers for energy are going to be pretty bad. if you look "x" energy, completely different picture. when you think of the impact the dollar has had over the last year, clearly not strengthening at the same sort of pace it has been. i think this coming quarter could see a sort of relatively weak picture for earnings. as we move in towards the latter part of the year, you should start to see earnings growth pick up in the u.s.
4:14 am
probably somewhere in the region of 6%, 7%. >> we're going to talk to you more, michael, throughout the first part of the show. get your e-mails through michael if you want to get involved. we're both on twitter. or the show itself. coming up, plenty more. the pan mania . is that what we're calling it? >> every scandal needs a good buzz word. >> david cameron admits he benefitted from an offshore account his father had. let us know your thoughts on twitter or e-mail.
4:15 am
4:16 am
good morning and welcome back to "street signs." we've been watching the yen-dollar trade all week, and finally we are seeing the dollar
4:17 am
pick up some strength against the japanese currency. you can see there up now about 0.7%. this, of course, will break that seven-day losing streak we had for the dollar against the yen. also coming as japanese officials are warning of further intervention to counter the, quote, one-sided move in the currency basket. the yen has strengthened almost 10% since the beginning of the year. let's get out to sri, who's in singapore. i know you've been watching this very closely all morning. bring us up to speed. >> yeah, it's curious because as you noted, nancy, we are seeing a move in dollar-yen higher. could be late-stage impact on the consequences of all the jawboning we've been seeing yesterday and today. it could also be a degree of positioning heading into the weekend. let's face it, the yen has had a quite super ride to the upside. we've seen 17-month, 18-month highs. perhaps some players are taking chips off the table.
4:18 am
nonetheless, the nikkei liked the fact we saw relatively weaker japanese yen. we did see 16,000 late session at one point. didn't stay there. we came off the session highs, and this is where we close, 15,821. chinese markets, also listen element of profit taking as well. we had a pretty good run-up over the course of the month. again, some investors taking some chips off the table. let's also not forget the data is going to be front and center over the course of the weekend and heading into next weekend as well. over the weekend, we get new lending numbers, the official numbers for the month of march. we also get money supply. that'll give us an idea over on the credit situation. also bad debt situation broadly. then we have the trade balance. we get the trade numbers next week as well. inflation on top of that. a lot to play for in terms of the china market. perhaps we could see some leadership from mainland china equities. all in all, a fairly fragmented
4:19 am
market. underlying sentiment still remains quite fragile because of global growth concerns. back to you now. >> sri, thank you very much. have a lovely weekend. michael is still with us. so why is the yen continuing to move higher, even with the japanese officials warning there could be more intervention? >> i think the yen has been extremely cheap. clearly after the huge devaluation you saw in the yen as a result of abenomics, it got to levels that are a bit too cheap. that's led through into a surplus, which is putting upward pressure on the yen, which could continue and leaves us slightly cautious on japanese equities having since 2012 been pretty positive on them through until recently. >> do you think ecb officials are glancing at what's taking place in japan now with the moves with equities and currencies and thinking even with negative rates, you're still seeing a currency that's
4:20 am
marching north. >> i thought it was fascinating the ecb minutes actually referenced what had had happened in japan and said that, you know, that had a bad impact on the japanese banking shares and on banking shares globally. that was one of the key reasons there was debate as to whether or not they should take interest rates further down. i think the ecb are also trying to move away from this idea of just moving negative rates to try and get the currency further down and instead stimulate the economy by boosting credit. >> boosting the credit market indeed. the ecb and boj are still keeping an eye on what's going on in china. we did get a reading of better pmi out of china this week. what is your read on what's going on there in terms of the slowdown and the transition under way? >> i think it's exactly that. it's about transition. but i think actually that the sort of concerns about china, at least in the short term, are overdone. we think the chinese growth will be somewhere north of 6%, both
4:21 am
this year and next, and that the stimulus you're seeing at the moment cuts in interest rates and a boost in the money supply. in the short term at least, you should get boost in chinese growth. >> does this suggest for the european firms that have more exposure that this could be a surprise to the upside for them? >> potentially, but we favor within europe the more domestic focused stocks, which are benefitting from the fall in unemployment in the eurozone and the pick up in consumer confidence. generally, it was also noted in the ecb minutes yesterday, you saw they were saying the concerns for them were around weakness emanating from outside the eurozone. >> i thought it was funny this morning, coming many and glancing at the headlines. "the guardian" talking about how the ecb is united on stimulus measures. the "ft" says ecb shows
4:22 am
division. then you have "the telegraph" staying out, saying the ecb vows to fight low inflaution. a lot of different reads. do you think they're united on stimulus, or are we seeing some disagreement from within? >> i think they're united on the need for stimulus and also on the fact that they will do whatever it takes. they're not going to give up on this inflation goal. i think where the division comes on what type of stimulus. clearly there are some members of the ecb that would prefer them to take the rate lower. others would rather do more via qe. >> and michael, you just mentioned keeping an eye to the bank earnings. what's your view on the italian banks? we're seeing some relief based on reporteds of a government
4:23 am
plan there. still, when you look at other european banks, not quite the relief rally many had hoped. >> well, i think the news that's coming out at the moment about the italian banking, anything that will take sort of bad loans off the italian banking balance sheets. there's only some names we like. as a whole, we prefer some of the insurance companies. >> all right. >> michael, thank you very much. what's on for this weekend? any nice plans? >> not in particular. going to the cinema. >> excellent. what are you seeing? >> i think we're going to see "high rise." >> i haven't seen that yet. that's one of the only ones i haven't seen. >> i don't even know what it is. you're good. you're a movie buff. >> i like the ones that are a bit artsy fartsy. can i say that? >> what was the one you liked with rachel weiss? >> oh "lobster." >> no, the other one. the italian director.
4:24 am
>> go see that. anyway, enjoy the movies. the ratings are rotten. i might go, let me know. michael bell joining us from jpmorgan asset management. it is weekend, right? you go see movies. >> and friday night is the big movie night. >> or a nice saturday matinee. >> depends on the weather. the u.k. prime minister david cameron admitted he held a stake in his late father's offshore investment fund. in an interview, cameron acknowledged he did own shares in the panamanian trust but sold them prior to becoming prime minister. >> samantha and i had a joint account. we owned 5,000 units in blair moore investment trust, which we sold in january of 2010. >> he paid his taxes. he sold the shares and the trust before he became prime minister in 2010. i'm sitting on the fence in this one in terms of -- not just with
4:25 am
cameron but in general. this is hacking of a law firm that specializes in placing money in offshore accounts, which isn't illegal. >> it's not illegal. that's something we need to stress. but it's about the elitism. there's this sense of anger. but as you say, nothing that's illegal. >> by all means, i'm happy to have ethics conversations, philosophical discussions about whether people in power should be able to move their money around or tell people how much money they have. >> and it's not a question of if they're allowed to be rich. it's do they play by the same rules as everyone else. >> of course they should. but it's not illegal to have money in an offshore fund if you follow the rules. i don't know the details of the 11.5 million papers.
4:26 am
i don't think anybody does. but it is a hack as well. how about all the people whose details -- >> and we don't know how the details were obtained. the privacy question. >> let us know what you think. you can find us both on twitter. e-mail as well. but the papers scandal led to a protest. demonstrators in paris blocked the entrance to the building after they learned the bank was involved in the creation of offshore accounts. swiss prosecutors have launched a criminal inquiry. the other interesting point is that rules have changed in the last couple years. so what do people do who maybe put money somewhere 30 years ago. how do you then -- rules have
4:27 am
changed, okay. >> so calls for more consistent transparency. we'll get into that more after the break. also after the break, once again we're crossing to the shimmering shores of lake como, for an interview with the former italian prime minister. wish we were there. it's beautiful. julia joins us again after this short break.
4:28 am
4:29 am
good morning and welcome back to "street signs." i'm nancy hulgrave. >> i'm louisa bojesen. your headlines this morning. >> reporter: the euro moves higher as the ecb's mersch tells cnbc that the ecb is not targeting a lower euro, but the currency could be a trigger for further action. >> it's one element which has, i would say, to some extent,
4:30 am
negatively surprised us, and that is the foreign exchange market. italian banks jump on reports that a state-backed fund will buy up sour loans and plug capital shortfalls. we'll be hearing from the former italian prime minister in just a couple minutes. and damage control as japanese finance minister says he is ready to intervene in the fx market in a bid to curb the rapid rise in the yen. and david cameron comes clean on tax. the u.k. prime minister admits profiting from an offshore fund set up by his father, which was reveal the in the panama papers. >> samantha and i had a joint account. we owned 5,000 units in blair moore investment trust, which we sold in january 2010. good morning and welcome back to "street signs." we have some u.k. manufacturing data to bring you, and it is coming in on the weaker side than many expected, from
4:31 am
manufacturing output specifically. down 1.1% on the month. that compares to reuters forecast of a 0.2% declining. so that's declining on the month more than many expected. if we can look at the revised reading for january, that was higher on the month, so up by half a percent on the month as well, revised higher. if we look at just getting the goods trade deficit here. coming in around 12 billion pounds. the ons is coming out commenting on the data, saying the fall in industrial output was driven by water and waste management. important to note here the february crude steel production was its lowest since december 2008. as you can see there, sterling slightly higher against the dollar, up now about 0.4%. the lines on steel production of interest as we have been watching this ongoing debate in the government.
4:32 am
>> absolutely. our markets here this morning, just glancing ahead to the u.s. markets are being called a little higher. could change. here in europe, a positive started as well. denmark is the only market that's just trading off by a bit. you just got back from there. >> i did. >> i'm heading there next week. we're looking at all of our other european markets just trading a bit higher. >> the italian market outperforming there as we've seen such strength in the lenders in italy as well. this supposed plan, we've heard reports of a government state backed plan. we've also been watching a number of stocks that have been upgraded across europe this morning. among them, axel springer, saying they've reached a tipping point in its transition from print to online. their earnings expected to rise 11% over the next two years. finland's nokia on the move.
4:33 am
higher by about 3.4%. well, just mentioning italy, let's let out to julia at lake como. she's standing by with the former prime minister of italy. >> reporter: thanks very much, louisa. enrique, so great to have you on the show. we may be in italy, but i wanted to talk to you about u.s. politics. the last time you were on cnbc back in february, you said you feared donald trump as a u.s. presidential candidate. how is that fear adjusted two months on? >> i think the damage is done because donald trump won the electoral campaign. must be a he will lose the elections. i hope, of course. but he already won the electoral campaign. he's the elephant in the room everywhere, always, and he's
4:34 am
doing something that is tremendous. he's changing the political mood in the states. he's obliging the other candidates and maybe the future president to change mood, to change directions, to have different opinions on many topics. for instance, trade. i was shocked by following the electoral campaign in the states about trade, and trade is becoming for both the euro, but the american political camp is a big problem for all of us. >> reporter: if he doesn't become president, you just suggested that actually he's won and he's already changed the agenda as far as the u.s. is concerned, particularly on trade. how do you repair that damage? can you as the next leader of the united states? >> reporte
4:35 am
>> i think that the consequences will be very important on the american political landscape. it would be very difficult if he gets a possibility to continue and to try to raise his political strength and not to leave this political strength in just an electoral campaign. it changed too much the political landscape in the u.s., that the consequences are immediate for the link with the european population. that is the other topic. so there's something that is raising at word level.
4:36 am
today you can breach this phenomena, and politics in the western world, it's something that's completely different than in the past. >> reporter: something that's driving the populism in europe is the refugee crisis. we've seen the deal between eu nations and greece and turkey to repatriate refugees. unfortunately, italy is caught in the cross fire because it's not part of that deal. i saw some survey saying there's been an 80% increase in refugees flowing into italy in the first quarter of this year compared to 2015. this is not a solution. this is creating an even bigger problem for italy. >> we need a global solution. it not, we'll close one route and the other route will be reopened. that was exactly what happened in '15. when may fwraigrants and smugglh the digital technology decided
4:37 am
to change in one month the route from the mediterranean route to the balkan route. that changed completely the way in which the european union was obliged to deal with the topic. only a global solution in terms of, i think, a european border police control. that is necessary. if not, we'll continue to be blaming each other, not controlling the external border, and we'll continue to raise walls among us. that is, in my view, the worst legacy of '15. new walls in europe and this idea of a new world between east and west in europe. i think that was the bad news of '15. >> reporter: it also means, or
4:38 am
at least part of the story here in italy, which i believe is now the most euro skeptic nation in the eurozone, and we've certainly seen tensions between prime minister renzi and brussels, a pushback on the policies. do you think that's a strategic mistake he's making, to have this standoff with brussels, rather than trying to be more inclusive? >> i think the key point for italy is to understand that italy without a successful europe, a successful euro, is not able to have rate performances. italy's performances are linked to european success and to euro area success. it is not by chance that italy suffered a lot of the crisis. more than others because italy's performance for the shaup of the italian economy is very much linked to the euro area and european situation. this is why i think for italy there's a big task. the big task is to take the
4:39 am
leadership of the euro area integration. a euro area integration with a euro area finance minister, euro area budget. the other circle is the larger europe sharing some policies like single market or migrant issues or foreign trade issues. but we have to focus on the integration of the euro area. this is for italy, i think, the main task. i think it's the destiny of italy to lead this kind of -- >> reporter: is prime minister renzi capable of that lead? >> i think it's necessary to do it. i think it's necessary for italy to do it. it's not just for italy. i think the convergence between
4:40 am
southern europe and germany and france is only possible in such a direction, such a path. if not, it will be impossible. also, i think it's useful for germany. germany, too, needs to have a euro area working, effective without the crisis we had with greece or with other countries. so i think for italy, there's this big, big direction today to take the lead. as mario draghi said, we made to have euro area -- >> reporter: i'll ask you again. is prime minister renzi capable of doing that? >> he has to do it. >> reporter: no choice. >> italy has to do it. for italy, it's the only possibility to get recovery. if not, we will continue to be
4:41 am
in this stagnant situation in which without a strong european recovery, for us it could be impossible. you know we have the best macroeconomic conditions. low oil prices, low interest rates. we have very, very good euro-dollar interest rates -- exchange rates. so we have all the positive conditions to boost economy and to exit from stag inauguration. we need big choices, but the biggest choice is to lead this euro area integration today. >> reporter: you don't sound like a man ready to step away from politics. i know there's been feverish speculation here in italy that you plan a return to politics in italy. is that the plan? >> no, no, absolutely not. i talked at an engagement with my university in paris. i will continue this engagement.
4:42 am
of course, you can resign from parliament, as i did. but you never resign from the political engagement. political engagement is hard. i fear for europe, for european future. this is why i'm so engaged in helping europe, supporting europe, and saying that italy has to take this lineup because italy's engagement is critical. >> reporter: thank you so much. the former prime minister of italy there, saying that he fears for the fauuture of europ and italy. a need grfor greater leadershipn europe. back to you. >> thanks, julia. we're keeping an eye to the
4:43 am
u.s. race for the white house. tracie potts joins us in washington, d.c. for the latest. getting support from jaul yany for trump, but not an outright endorsement. >> reporter: that's correct. trump is also shuffling things around on the inside. some insiders are saying that the campaign is disorganized, that they've been late to the game in some states. he's now elevated a new manager, who will focus just on convention strategy and delegates and whether or not he can get enough delegates to one. the campaign has been lowering its expectations now, saying he may get as many as 1300. before they said it would be quite a bit more than that. that's just above the threshold he would need. so he's canceled events today in colorado, which is one of the state where is people have complained they've been disorganized. also cancelling california to stay in new york and to sort of work on the inside on the game plan. new york is the clear focus today for both sides.
4:44 am
ted cruz also off the campaign trade today, taking a day off. but picking up some support from delegates in colorado. and on the other side, this war of words between hillary clinton and bernie sanders seemed to have toned down a bit overnight. sanders said that even though he said clunn to was unqualified, that he would support her over any republican. she saying the same about him. looks like they may be tamping things down a bit in that war of words we've seen. >> tracie, thank you very much for being with us. now, reigning champion jordan spieth got off to a good start in husbais bid to win aga.
4:45 am
rory mcilroy, he sits five shots off the lead. did you know, incidentally, tiger woods has won 77 pga tournaments. >> not doing so well. >> birdie comes from an american named ab smith. he played what he described as a bird of a shot. so that became birdie. >> can't say i've had too many birdies in my time. >> you like golf. >> i do. trying to get into it. even if you're not a golf fan, augusta is the place to watch. stunning. >> if you're a runner, i find it, very hard to switch to watching or playing golf because it's very slow. >> it's quite calming to watch on the beautiful course. but it is slow. my father always said the two best things about america, the golf courses and college campuses. so there you have it. people will be watching augusta this weekend no doubt. still to come here on "street signs," uber is paying out in california.
4:46 am
why they're in hot water, straight after this break.
4:47 am
4:48 am
welcome back to "street signs." uber has agreed to pay $25 million to settle a case raised by a california court, which accused the company of misleading commerce about the strength of background checks carried out on its drives. the san francisco district attorney said the outcome sent a clear message to businesses and startups that the tax hailing app said it would glad to put the case behind them. now bidders are lining up for yahoo!'s internet business, which verizon is set to make an offer for as early as next week. verizon had previously said that yahoo! could work under its aol division if the price was right. shares in yahoo! swinging
4:49 am
heavily in yesterday's session. additional prospective suitors were named. the likes of google. and we've also been getting new developments in the valeant story as the troubled pharmaceutical looks to shed some assets. wilfred joins us state side with those details. >> morning, nancy. morning, lou. bill ackman says the company won't butt bausch & lomb on the block. they're only considering selling noncore assets. pershing square lost about $1 billion on the drug company since taking a stake in march 2015. on an investor call yesterday, ackman said he expects to make back his losses. of course, significantly under pressure. thus far we don't have any clear indication if it's meaning investors heading for the exits.
4:50 am
as we look at things right now, futures pointing to an almost triple digit open. called higher by about 94 points, following the gains you're seeing over there in europe. >> yeah, wilfred. certainly good news for investors. great to see you. have a nice weekend over there. meanwhile, we want to bring you a view of copper prices. despite a bit of an uptick this morning, now we're back into negative territory. off about 2.8%. it's been a rough week for copper prices. this comes as we saw supply data rising to its strongest level in five months. still some concerns there we when we look at the copper price itself. elsewhere, we've been watching oil all week. if we can get a view here, you're looking at wti and brent. both sharply higher, up about 3%. equities took a cue downward when we did see the oil price break its winning streak. very different story today. oil prices pusng higher,
4:51 am
though interesting to note wti still below that crucial $40 a barrel level. well, let's bring in the managing director for institutional research at first energy capital. pleasure to have to you with us. it seems every day we talk about whether or not we're going to see a sustained rise in the price of oil. a lot of caution as we get closer to that mid-april meeting with opec and non-opec players on the board. what are you expecting? >> well, there is a lot of volatility. the fundamentals have been slowly improving, but there's not drastic change. and you have opec, whether there will be a freeze. at the end of the day, i'm not sure that's relevant to the fundamentals. we're respective of the outcome of the meeting. it changes sentiment. there's been a lot of up and down. to respond to your question, i don't think we should really get much from that meeting.
4:52 am
i don't think there will be any agreements being made. >> other analysts suggesting that as well, but if it's not relevant, what is relevant at the moment to the price of oil? what's driving us? we had data yesterday as well. u.s. and german data implying more support for fuel demand. >> i think the overall supply and demand is what matters. the overall inventories in the u.s. is what need to be looked at. those have been rising at a much slower pace than earlier. that's one thing people need to look at. so we should see those inventories starting to go down. >> and how does this play out into the specific oil firms you cover? because we've already seen oil
4:53 am
companies reducing investment, reducing capex. >> it's a very difficult environment. the equity -- it's an interesting situation. if you believe the -- most of the equity of the small companies have zero value. the second element is debt, which is perhaps the biggest issue. costs have gone down, but companies have not gotten past cost. you see a lot of fiscal bankruptcies. >> and do you expect additional cuts to the dividend going forward? >> well, it will all depend on the price. we have a fairly bullish view on the price. this year is particularly important as people adjust to lower costs.
4:54 am
hopefully the oil price bounces back next year. >> so what are the companies you like? what are the companies you'd single out now for investors? >> we tend to specialize in more junior companies. there are really two schools of thought. one might like defensive names, which have a balance sheet that allows them to survive an environment like this. there are companies which have no value but provide a huge upside. it's all about making sure a company is not going bankrupt. >> thank you very much for being with us. managing director for institutional research at first energy capital. >> thank you very much. >> you're welcome. have a good weekend.
4:55 am
>> likewise. >> are you seeing "high rise" by any chance? one of our other guests was going to the movies. >> that's not in the plan. family coming back, so a lot of children related things. >> very nice. >> got to get outside, hopefully if the sunshine comes out. >> you're right. i want your inspiration for what to do for this weekend. so thank you again. >> thank you. let's inspire you with the u.s. futures. if you're trading in the states, we're setting ourselves up for a slightly positive start to the session. the implied open on the right-hand side of your screen. the dow jones being called up by just shy of 100 points. speaking of the u.s., janet yellen and her three fed chair predecessors have given their first ever joint speech. during the evening, yellen dismissed suggestions that the december rate hike was a mistake. she was supported by both mr. bernanke and mr. fwregreenspan,
4:56 am
said they didn't see a risk of recession on the horizon. what does the data say, the nancy? >> well, we're at the u.k. data. looking at this morning, industrial output falling unexpectedly. manufacturing is still quite weak. on a monthly basis, manufacturing output, industrial output falling shy of expectations. we are seeing a bit of a pared back of sterling strength. still higher against the dollar by just over 0.3%. this really reiterating some of the concerns specifically about the u.k. manufacturing sector. we did see a lot of weakness in sterling last quarter even. some tying that to the brexit fears. others saying, look, it's largely data dependent as well. >> i think it's brexit. >> some might say, why haven't we seen the euro go lower with brexit fears? that should bring downside pressure to the single currency as well. >> but then it's maybe a dollar story as well. with bigger hedge funds trading out of the dollar, they're not wanting to hold a long-term
4:57 am
dollar position. >> waiting to see what the fomc will do as well. we're also keeping an eye on the euro. it did get a bump this morning. he did admit the currency could be a trigger for further action, including more negative rates. >> it's one element which has, i would say, to some extent found negatively surprised us. that is the foreign exchange market. >> that's it for today's show. have a fantastic weekend. i'm louisa bojesen. >> and i'm nancy hulgrave. "worldwide exchange" is coming up next. you can't predict... the market. but at t. rowe price, we can help guide your investments through good times and bad. for over 75 years, our clients have relied on us to bring our best thinking to their investments so in a variety of market conditions... you can feel confident...
4:58 am our experience. call a t. rowe price retirement specialist or your advisor see how we can help make the most of your retirement savings. t. rowe price. invest with confidence.
4:59 am
5:00 am
good morning. hawks v. doves. janet yellen says the u.s. is not a bubble economy, but today we'll hear from policy members from both camps. and that could spark a volatile trading session. consumer crunch. shares of gap under pressure this morning as retailer sales fall short. and it's cut day in augusta. defending champion jordan spieth at the top of the leader board. it's april 8th, 2016, and you're watching "worldwide exchange" on cnbc. a weekend of golf.


info Stream Only

Uploaded by TV Archive on